Staking with Conviction w/ Jasper (Rocket Pool)

Transcript

[Music] thank you welcome back and thank you for joining us for another episode of The Strange water podcast if you have spent any time on crypto Twitter in the last few months you know that we are deep into the eat staking or LSD narrative lsd5 LSD back stable coins LSD indices and that's before you get into the black hole that's drawing most of this conversation's energy which LSD is best it's moments like these when the narratives get louder than the underlying purpose where I force myself to take a step back and ask the big

questions what is ethereum staking and why does it matter today we are speaking with Jasper the Friendly Ghost one of the most passionate and vocal Believers in the world computer that I know Jasper is a rocket pool Maxi he is a paid Community Advocate an operator of the odao which is roccopool's back office system a former Treasurer and a member of the rocket pool incentive management committee suffice to say that there are very few people who have thought about ethereum staking more than Jasper and while Jasper is the guy to talk to regarding rocketpool this conversation

is about so much more than just one protocol this conversation is about systems and economic design the rule of ethereum in modern society and perhaps most importantly the individual motivations and passions that bring each one of us to the world computer one more thing before we begin please do not take Financial advice from this or any other podcast ethereum will change the world one day but you can easily lose all of your money between now and then and for further disclosure I am a rocketpool node operator and I'm invested in the RPL token and of course my bags are heavy with eth

alright let's start the show Jasper thank you for joining me on the Pod I'm super excited to have you here excited to be here a long time coming yeah for sure so um I cannot wait to get into ethereum but um before we get into like the um the beating heart that keeps us swimming uh towards the city in the same direction can you please give the audience and myself just a little bit about like who you are your background and what brought you to the world computer yeah so hello everyone thank you for having me uh I love what you put out for the community uh great resources for everyone it's especially bringing

down some high level Concepts which is ultimately uh one of the things that brought me here so who am I I am Jasper the Friendly Ghost I joined the crypto space back as a uh sort of consumer Advocate uh sorry purely consumer just uh in my econ high school class yeah I was just fiddling away in the back of class not really paying attention to lecture uh and instead watching like more intra Kelly and all these random uh fintech uh twitch streamers at the time who would just give them like in retrospect really awful advice uh especially given March Kelly then would go on spend years in prison

but he put turned me on to the notion of Bitcoin uh and so that was in 2015. so there I was board an econ class this Chinese new thing Bitcoin had recently reclaimed a thousand dollars I remember that being big news to me at the time um but you know I sort of like pushed it to the side uh until the bull market came around and then I started digging Italy deeper and I discovered ethereum oh and so I was still like super passive at the time this is 2017 I started ball on the way up uh and then I went off to college and in my undergrad experience I was a philosophy major I was studying pre-med I was very far removed from the

world of cryptocurrencies but I still kept like a arms length uh appreciation of the space uh maker Dow is really what kept my interest going in those sort of dark years you know I remember when die first launched I remember when they had their collateral crisis the Black Swan events uh and it's crazy a lot of the crypto natives think back at March 2020 and remember how low the prices got uh I remember looking at the prices I'm sort of like chuckling at how low ethereum was but the major concern on my mind at the time was that kovid was sending me home from school cool which ends up being a really important point because suddenly I'm no longer at University I have a lot more

free time on my hands uh and I still like this intellectually curious person driven by philosophy and that's what I was doing at the time uh at the end of covet I was finishing my philosophy thesis on Buddhism totally unrelated uh but you know thinking in these abstract ways about uh metaphysics made me kind of approach crypto in a different way let me just back up for a second so at the time I was studying doing my senior thesis in Buddhism super left field pretty unrelated but you know I was thinking about things in really abstract ways and I had this reignite reigniting of my passion for crypto and

I took it from a principal's first perspective I was doing philosophy in such a way so I wanted to approach crypto in the same way and so the ideals that drove my interest were decentralization helping the actual people on the ground and how could you do that It ultimately came down to building the most robust thrustless World computer and at that time this is now like mid-2020 late 2020 uh really it was like the the slow birth of the whole l1s but it was a theory it was Top Dog uh D5 summer was just like still in it's like dying throws of grandeur it was still

wonderful uh and Rocket pool was and was exiting its first beta so this is now getting into like 2021. so Rocky full really was the synthesis of a lot of the philosophical before we get to Rocket pool uh just because um as you can see from your shirt if you're watching on YouTube like rocket pool is a major part of this story but um while we're still just um treading water in your like journey to crypto um so I'm a really really big believer that especially if you're an American or a Westerner and I'm not sure what you are but um for the sake of this conversation I'll assume you are that um that like in order to be a true like

builder in crypto and a True Believer um and not just like a financial Speculator like you you need to see something wrong in the world that crypto fixes and you need to be kind of betrayed by the system that we were all taught was fair in order to realize like we need Solutions and so um it's interesting to me to hear that like die and maker was like a big part of what you were interested in and and so I guess like when you think back like and you reflect on what was like that kind of burning Ember deep inside of you that like made you know that there was something important going on here what what would you kind of attribute to what was going on in your life that brought you to like

due to crypto so I mentioned earlier how Buddhism was actually super left field I take that back it's actually a perfect metaphor uh there's this idea of metaphysics like what is real and what do you give authority to Define what is real that's a big problem like in our metaphysics oftentimes in like the Christian world you see God is the definer of reality and uh God sort of has this Authority well in The Current financial system we have a similar similar question the metaphysics of money who gives money value and the American system is the United States so what did I do die broke the curve die established for the first time a non-sovereign non-national bound

currency so in this dichotomy or this status quo we had of money being a solely nation-state derived apparatus totally gone now what is money metaphysically like in a more fundamental sense we now have to think about okay what defines value uh and what pushes that forward so that really was a zero to One Moment In My Head uh and I think stable coins in general uh recognize that I mean I think that was the first real winner crypto had I said besides you know being drug money well actually drug money is uh the realization of a stable currency in a pseudo sense yeah I mean it it's irresponsible to call Bitcoin stable

during that time but it serves in short-term transactions it worked yeah right yeah yeah yeah yeah yeah for sure and so um earlier you you made a comment about like how crypto can help people and I um I think we're all here for some um for some reason that can be described as that but for you when you see helping people what does that mean is that like really about like providing people access to you know like inflation um resistant or non-inflationary money is it about like money transfers across like political boundaries is it about like access to like complex financial instruments is it all the above like what does helping people mean to you for

me it it comes down to access um well I was in an undergrad I was on the debate team and one of the most common thought puzzles problems we would like to do is um how do you expand banking access worldwide or how do you uh industrialize a growing economy and one of the things we always came back to was enabling a credit system enabling a safe banking system and getting people out of purely holding cash and into a broader economy this problem enables tremendous growth if you can solve it and what we saw with internet and the ryzen smartphones was an

increase in the speed of penetration into the land mass like uh internet had a very slow trajectory compared to the rate of smartphone growth crypto currently is keeping Pace with the latter but what it brings is the potential of financialization Beyond just connectivity so that is going to be huge and is current Solana gets a lot of flack this whole Solana phone gets a lot Flack but people are underestimating the value that a successful phone that integrates a banking system can have on billions of people I am Indian by nationality and my family sends remains is cross-border uh there's fees Associated that uh crypto

has you know saved us money in that sense but that's not a luxury everyone's familiar with uh so helping people in this really real way of ground level not corrupt financialization going to be zero to one moment another thing that you know bankless has been getting a lot of flack recently one of their best interviews was with the Ukrainian Minister uh uh digital reform it was shortly the middle of the Ukrainian War what they discussed was how during the first week two weeks of the war the traditional banking system was essentially collapsed you know it's very fragile dependent on uh each banking

center having full access to electricity and so so many other things whereas an ethereum wallet works with just Wi-Fi if you have a little bit of Internet you can do so much and so they were underwriting a lot of their transactions with the donations that were sent in and they were able to back they were able to fill orders because of the ethereum network which was astounded yeah yeah man I um you know I didn't catch that specific one about bank that specific episode on Bank list but um you know I I've mentioned it many times in in Discord or um on this show like my fiance is Russian and so um you know I've been like her family

still lives in Russian so like I've um been more aware of this war than most Americans and like one of the things that um we experienced well didn't experience but saw happen firsthand um last summerish was like the the mobilization was like a lot crazier than um any of us in the west understood and like it got to the point where like my fiance had she's a she's in dental school going to on to be an oral surgeon teaser for later in the episode yeah but um but like so her friends in Russia like her male friends like you know my age or younger were like talking to her about like okay can we get to the

US like is that even possible it's not like okay like how do you break an arm like to you know like how do you break the like I mean and I just like when you're talking about war like whether this is like us sitting in our history class like like pretending like we care but we just care about the a or like talking about a real war that's happening right now like it just there's the there's the people making the decisions and then there's the people that are affected by it and very very different groups of people yeah and I just like there's something so like crypto for it's like most profound use cases it's like it's ready you know it's

and I just speaking of bankless um I think it was vitalik was on Bank list at the end of last year and he made this comment about how she is in South America and he was super surprised that um everyone there is using crypto but like guess how they use crypto they all just use their binance wallets and like we don't give a about like decentralization or being on chain or D5 or whatever like it just works they need it yeah yeah you know they they need to like be able to store value in a country where it's illegal to buy dollars and they need to be able to transfer it to someone so that they can buy food and they think that um yeah man I'm rambling here but I just think that um like it is about helping people one

more one more thing to add another common thing on this really unfortunate I've highlight of the value of crypto is uh uh people who are fleeing now have a way to flee and retain their wealth uh like human migration and past has been devastating in a large part because people lose everything in the process and have to restart with nothing but for the first time you can on a little USB or even a piece of paper you can carry vast sums of money across borders hidden which and when you're being when you're being politically persecuted whether you're a war dissident or religious religious persecution it's can change everything yeah I mean that's about like and like like I I was just in Europe I got back this

weekend and like when I was there I went to dock out and I went to Auschwitz and I went to birken out and like part like this was like our grandparents you know like this wasn't that long ago and like the the it it's one thing to say like hey like you can when you need to flee your country you can bring all your assets and stuff but like part of it is like hey you're gonna have the flexibility to flee your country when things get really bad and um anyway man way too dark yeah let's let's move this forward so it's um 20 20ish 2021 and um right before we get to Rocket pool being in

um what I guess like their first beta or however they phrased it but we like before rocket pool there is the beacon chain and like the birth of like East staking and so um as someone who was didn't join this industry until after that moment um can you just like share with with the audience like just um like kind of your reflection on those times and like what it felt like and like what proof of stake meant like the promise of proof of statement then and now a year or many years later but now that it's implemented like what what is it did we deliver like how does it feel now so I first learned about ethereum 20s early 2017 uh and back then

proof of stake was known as eth 2.0 right uh like this is going to be the next eth and there was I remember it was like a recording of a metallic Devcon talk and there was like 10 people in the crowd it must have been like a 2016 lecture and it's on the road map at the time and metallics are genius because back then it is just so detailed like every step of the way and not only that it accounted for like possibility of possible variations like sharding was always a potential it was never a guarantee like obviously we thought of it as like this is going to happen but back then it was just on the road so I was familiar with proof of stake I was expecting it like most

people were uh like 2018. so the bull market comes uh the prices start crashing and I remember the good friend of mine who I told to convinced Dubai at the time he was like what's going on I was like don't worry price is just noise it's a multi-year plan proof of stake is coming starting is coming uh I was just off by like a magnitude of years so like what did that feel like right uh seeing I wasn't technically Adept enough to really understand the proof of State change like the switch so my commentary on that would be bad all I can say is I understood that the devs decided there was a better way to do it

and they were doing that instead which I thought was like you know what fair enough and I do just so like um hover on that point a little bit like it vitalik is a genius and like I have I have really really like strong reactions to Hero worship and um like cult of personality and uh you know I mean I think that like Terror happened because we all like bought into Pokemon and so like I've built up um antibodies to that but like every part of my body wants to say like vitalik is just some guy he's not that good but oh my God like you go look back at like the 2013 things that he was talking about we're deliberate on it

today yeah I've been reading uh proof of stake uh it wasn't it was just a collection of his essays and then like I'm just taking notes along the way like this predicted that this predicted this it's it's insane I know I haven't um bought it yet because um what what he said was this was just a collection of essays from my blog and I'm like I mean I've read them all I have two I've read a good amount but it produces a narrative yeah yeah it's super like I whatever I I'm just being lazy but like it it's super it's one thing to read the essays but to see like which ones he chose how he chose to lay them out like that's part of the story as well yeah yeah so getting back to Beacon chain

right uh so I was part Mike mainly kept up ethereum news through the youth Finance subreddit home to many home to many therein I discovered daily guay bankless and I remember that there was like trepidation and fear leading up to the beacon chain Lodge like are we going to get enough Eid like well people want us it cracks me up now but we were really worried like were people going to want to steak eat is there are the rewards going to be high enough because like at that time we're coming out of the depths of the bear market like 90 eath is still fresh in our memory

um and morale was not great yet the BK chain launches and it goes off without a hitch like the to my recollection uh working fine and that was a huge boost to the community and then the stake started flowing in and every day people on the thread were like counting they're just watching it like uh and updating also like the node operators are coming out in force and so you saw eth Finance like really start to like uh Embrace its Community because people now needed to discuss um their known operation setup and then what happens is we see The Return of some higher priced Eve right and that

brings just a huge uh like throwing gasoline on fire uh we hit the 700 do you remember what the amount required to launch the chain was like seven yeah like I just like all cards on the table like I found like listen I I was at I was at school studying computer science in 2013 like I read the Bitcoin white paper back then like I remember Mount gox I was worried about like wheat Futures like I remember all this stuff but it wasn't until May 2021 when Hayden Adams was on a Bloomberg podcast and ex that was the first time I heard someone explain ethereum and I was like oh my God so anyway so I had this very node

operator-centric introduction into ethereum like Maine uh and so that fear dissipated and turned into the Euphoria it was really like this community come together like Bitcoins they have their happenings ethereum has like Dev con but it didn't really have a seminal moment to come together with until the beacon chain and then there was also and then it was like not much until eip1559 but yeah I would say that was like the start of the experium super cycle in my opinion the launch of the beacon chain in 2020. Yeah well yeah I mean I I do think um for a lot of reasons which I don't know maybe we'll talk about maybe we won't like

um staking is changes everything and it changes everything from a like crypto Economic Security standpoint from like a financial asset standpoint from uh um I mean just from like a logic standpoint like literally Bitcoin is burning carbon for the sake like the point is to waste the waste the most like it's interesting the the environmental aspect was not such a huge focal point early on and there was a large amount of time between the launch of the beacon chain and the merge I really think that time could have been cut down um if the Environmental fear that sort of took over towards the

second half of the week to the merge happened earlier I I want to say Vitality commented on this at one point or Danny Ryan commented on this uh ultimately the merge was the hardest thing the ethereum developers had ever had to do and the fact that it went off without a hitch was are you rebirth all the way but at the end of the day we're still left with this idea of like how much extra CO2 do we have to add to the atmosphere we were running like the equivalent of a small country I think that no matter what side of the debate you're on like it's it's a distraction from ethereum and like look like you either believe in climate change or

you don't and if you don't like um I I have a doctor you wanted to talk to but yeah like you know like there's like things that are helping and things that are hurting and like this like really helped and it like helped like in a pretty significant way but like it it helped in like a way that it's just irrelevant to the actual problem and is not really like why we did it so I um you know it's cool but um again the only reason I brought it up was just like ethereum should be proof of stake and um one tiny piece of that is like the environmental aspect so anyway a huge part of proof of stake is um the staking decentralization changes

like the the Dynamics behind decentralization changes between uh proof of work and proof of stake and so um you know I I think um we can talk about a bunch of different things here but just kind of kind of like skip ahead to the interesting one um I'm not sure what happened first Lido or rocket pool but um those are like kind of the two directions that um at least like phase one of custodial staking um kicked off with right and they were basically like Polar Opposites and so um one do you just like have any Reflections about like what that time was like when these projects were

kicking off and two um do you think that uh what we see today with like the massive centralization and like the problems in the conversation was that something that was like bubbling in the surface during Genesis or is that only a reflection of how bad things have gotten uh just to uh correct you a little bit bracketful and Lido actually launched pretty differently uh so so I just meant timeline yeah yeah they timeline wise they lost Rockville launched much later uh some history however rocketpool was designed on the original staking contract the Casper staking contract uh and the token sale and Ico happened in

2017. this might hurt you if you are just now deciding to be a node operator but the RPL price at Ico in each terms is like 0.0005. that was three zeros yeah I mean whatever I bought I bought my multiple of my RPL like thing my my nugget in February of last year so I think I paid 45 bucks but uh so the Ico happened very early and it was a very fair launch uh the dial held no tokens the team was retained 10 to 20 I believe 25 of tokens uh and that was several years ago what ended up happening was the ethereum core devs decide decided to

change how staking was going to work very shortly after rocketpool launched its first aspect uh so fun fact rocketpool is the only contract developed for the original ethereum staking contract the bad thing about that is Rock people wasted the entire two years essentially some of the architecture and framework and like theory was able to transfer it over however uh Rocky pool did have this ethos of making sure it was launching in a as decentralized manner as possible and this meant enabling permissionless node operators that was sort of this unnegotiable aspect of the protocol launching

however when the BK Beacon chain launched rocking pool was not able to live up to that expectation and there's an article that was released around this time by the CEO or the founder David rugentike that sort of explains the decision to wait uh to make to release a more decentralized product so there's a vacuum there's no decentralized decentralized uh non-custodials taking for any custodial Pond Lido launches very fast very shortly after the beacon chain launches you have peer-to-peer validator Lido the original stakewise Cream finance and a few small others

coinbase not immediately I don't believe uh so that yeah I feel like points yeah so that much later that early scene was already being pretty dominated by lydo so they executed a pretty beautiful Vision uh by releasing the Lido tokens to the the developers of other major daps they pretty much established Steve into defy right from the get-go uh and that created a an immense windy effect this is also sort of the skinny merge at the time uh sorry even before the merge so yeah what's the what's the skinny merch

a skinny merge just meant that when the beacon chain and uh maybe ethereum main net merged withdrawals were not going to be enabled it was just the consensus would now shift over to vegan chain and the beacon chain would actually be useful there was a an interview on Bank list between um Lolita Lido founder uh whose name is escaping me at the moment uh a coin uh and Rocky pool and I remember at one point the lot of Representative commented everything chain is like potato which was a funny joke at the time because it was true the beacon chain that was produced to producing empty blocks waiting for the merge so we have this period of about a year where

there is no not not external product until Rocky pool launches and even then when Rocky pool launches it's in this very economically gated state so whereas Lido can onboard you can throw at it with Justin Sun likes to test out himself with 200 000 each rocketpool had limitations to enable a two-sided balanced Market yeah so so I do think that that is like worth picking apart a little bit right and I think um so in a second why don't you describe like the mechanism by the way this happened that the deposit pool and like now how the breaks have been um if not taken off just loosened a lot and so

um because I think like what's really important to understand is like these systems that rockapool put in place like were specifically designed to slow things down right to not like allow people with eth to deposit it into rocket pool until there was a node operator to match it and like that is like very very much in contrast to Lido and like other people who is fracks like we'll just like accept whatever you want like whatever you're willing to give they'll take it and so like one is just like more scalable and faster and like can grow a lot better

but like that has consequences so we'll talk about the consequences in a second but can you just describe what the mechanism is for Rocket pool sure so Rocky pool acknowledges that liquid staking is a two-sided Market you will always have a node operator and you will always have the liquid staking operator instead of trying to just ignore one half of the equation like Lido for X Etc do and let the liquid staking grow unbounded they had to grow in tandem so at launch uh you could launch a mini pool with 16 each 1.6 Ethan RPL there was eth in the deposit pool so at the time of launch it was a gated launch in steps at first only I think like 500

and 1500 each was allowed it capped at two thousand so at any given point there could be 2000 eth waiting to match someone to launch a validator so most of the time there was a very slight premium uh our Eve would trade at like point zero point one percent above what it was supposed to trade at because like normally like if you wanted to Mint re if you would just put it in the deposit pool but the deposit pool was maxed out so therefore the only way to get Reef was buy it exactly and so early on uh you could come in as a node operator if there was Ethan deposit pool majority of the time there would it would be full

and so node operators and instead of having unbounded growth for the liquid sticker we had sort of unbounded group for the node operator and that sort of summarizes the rocky pool story it is truly focused on maximizing the node operator experience as an extension of maximizing the ethereum experience and and what we've seen now just we'll rewind in a second but we'll now post merge where we two things are happening one everyone has realized that like um East staking has been de-risked um from the existential side I'd say I guess I don't know I mean there's still race don't give me more they're still risk but um but two is that rocketpool like took

the brakes off of the deposit pool and now yes twenty thousand fifteen thousand but there is there's this like a straight there so in this early system that we were really just trying to figure get the product live in in a working faction uh there were optimizations to be had now we find that with the Advent of eighty mini pools which is instead of having to post 16 each we found that it is safe to do it with only eighties this has had a dramatic impact on the Node operator Supply and we've found that we now have flipped it we now have a surplus of node

operators and we can sort of be like hey we can accept a lot more Ethan flow for our liquid staking side what the system allowed for uh is an additional cue a rocket pool specific cue so if you wanted to Sprint up a validator you could put your Ethan into this queue and is sort of tax on to the deposit pool so if we had a thousand validators in the queue well that means there's an additional 24 000 each that could be minted worth of RV at its peak uh the protocol could have handled a 97 000 eth deposit however it's sort of like a supply demand balance now the longer the queue gets there's this funny

interaction uh our APR actually can grow higher than it's supposed to this is this is a little technical here uh so I want to try to slow things down The Reef Supply say is at 100 r e like there are 100 people each holding one R each now we have a huge influx that people want to spend on validators and the queue gets very long like tens of thousands of people well funny enough we figured that it would be more efficient for those people in the line to start the valiators earlier on in the line so the earliest validators actually

get to launch their validators by the later validators in the queue so the first validator has their validators are each portion supplied by the second third fourth fifth one this allows the total amount of Eeps staked for the already Supply to grow over a hundred percent yeah I think it's like definitely get like more complex now because um I think there's like a lot of interesting things happening right like part of it and you know like we're not going to go through all these things um because like there's more things to talk about but part of it is like changing um to like the the um eight eth mini pools right there part

of it is increasing the deposit full size and part of it is this like new but very cool balancing mechanism that through like the technical way that you just describe essentially what's happening is the mechanism is pushing the returns of um like pushing like kind of the excess returns of this system towards the the side that needs more people so whether if we have too many stake too many node operators and not enough eth then the node operators will be more incentivized by this mechanism and if we have too many people depositing e well both directions work actually so it's actually the other direction is much more intuitive it's called Rocket article so I've already been trading at

a premium if there's so much re demand you as a node operator can what you do is you launch a validator you mint re and you burn it simultaneously and you end up expanding the re Supply and capturing a bit of the premium again this is all automatic automated yeah another way like and I've done that before it's great there was a time when you could like earn like a whole extra eth by doing this um until like yeah I I uh man we're getting like a little bit lost in like some all the amazing features about rocket pool because um where this conversation started is like on first principles and as as you said and feel free to push back on this

if you want but like rocket pool is built for node operators to give them like the best experience possible because like the core thesis was like we need to decentralize the network and um you know like the the like financialization comes second and I think um what we're saying with frax and Lido is the complete opposite right like the financialization is first and then like we're gonna figure out the decentralization second and I I just this is a very open-ended question so I'm sorry for that but do you just have any thoughts on on how easy it is to decentralize something

after the fact like what Lido is gonna need to do in order to be like a healthy participant versus the the reverse what rocket pool is doing which is starting out decentralized and then working out um how to like supercharge the system with financial mechanisms I think it is incredibly hard to go from a centralized and fully grown system to a decentralized system I think what a lot of people get caught up in is centralization is great when you launch something new often because you need to have safeguards in place and it gets out of control when you stay centralized through the growth stages because that

makes the transition to decentralization much much more difficult so to back up for just a second in prior to the launch of Lido there was a paper published by Paradigm Giorgio's and I think hasu wrote it and it was on staking pools bill in ethereum and it was essentially predicting that it would be a power law majority following the first liquid defy accessible Med friendly staking token it was pretty much the blueprint for Lido and I this article festered in the back of my head for years I started working with rockpool and I ended up publishing a counterpart art counter article to them

why Paradigm was wrong why arith will flips Thief and essentially I point out that some of the warnings some of the things they pointed in the original article namely that a liquid staking token must gradually decentralize as it grows was lost so that original article had these claims uh one of the major one was I should not grow over 33 without getting rid of governance it was just right there in that original Paradigm paper yet here last year Lido governance votes against any form of supplementation it seems like the financialization once

you start with that in mind it's very hard to lose that so now that's just on a philosophical on a philosophical angle it seems like the Dao has embraced financialization as a chord principle whereas a rockapole Dao Embraces decentralization and ethereum as a principle and it votes as such um in turn you now have a very difficult proposition in front of you how do you take a dow committed to financialization for the most part and turn it into a decentralized actor and not only that you have to do it where you have 29 operators handling each about one percent of the entire ethereum network or one operator

operating like three percent of the network or yeah yeah uh bad apples either way and here is the ultimate Challenge what system can you enable that is not gameable to permissionly distribute that stake it is a very very hard question uh Lido has been doing what would you say to the pushback you're right can't just can't distribute it we're not going to distribute it the way we do decentralization is that every incremental eat that comes in the future goes to a new node operator so like the existing stage just stays there new node operators get the yeah like tougher to visualize for Lido because there's not enough eth left right but like for frax right like what if they just said like

the way we decentralize is like the second we launch frax V2 um from here on out like every new can only go to a new node operator like do you think that that's a viable like path to decentralization not real well it depends on when you do it like once you're holding three percent of the network in that original validator that's you're already a risk to the network right uh no network author so the way the network decides who is too big is approximately one percent because that's when correlated slashes get or correlated penalties come into play uh and who Bears the brunt of correlated penalties for liquids taking pool tokens not the node operators retail always retail the risks are always just passed

on to retail while the benefits will continuously flow to the node operators that is why they are content to take on as risky as a position as possible uh who as long as people are willing to accept it in my original response to the Paradigm article essentially my case is that these risks cannot be cannot go against ignored forever that they rear their faces if you wait long enough and you can either act preemptively or you can face the major slashing incident and then decide so actually and they uh it did happen it actually did yeah right so let's so would you like share with the audience like the story of what happened actually as it

happened and then can you describe the correlation penalty and can you retell that story but as if one validator that controls three percent of the network had made that mistake so the Lido node operator rhmb or something like that is at the gap for what they allow it's actually over it's like more eat than they want in a validator uh had gone slashed they were I believe switching so for the people who are proficient node operators you are going to be very disappointed in these professional node operators so when you want to switch clients and you are a node operator uh there is a little bit of risk there

because when you switch your previous client might still be at testing to the network and you don't want to have your new client also start a testing otherwise your book because it's a double attestation your old clients are testing your new client at no job no no good a rocky pool network has a very simple thing called doppelganger protection where it will check to see if your old client is still attesting in the network before allowing you to start your new claim alternatively you could just wait 15 minutes because that's the longest the old client could possibly still be attesting uh Lido did neither of these things they switch clients to a new client and they

got searched fortunately this was localized to uh 20 validators it was not a correlated slashing because it did not affect all of their validators which was lucky there are a few different ways there's a few ways this could have gone very differently so before you get there like let's say it was like 20 validators approximately so that's approximately 650 eth right and so what was what was how much what was the penalty how much was left the penalty for that is just about uh 11 8 I think it's half e for a validator all right so keep that in mind right so because this happened to 20 validators which is 650 eth

that it cost 11 eth right so Jasper like what are the ways this could go really wrong and when we say really wrong how much does that cost I cannot give you perfect answers on the cost but I can tell you where to find the perfect answers and I can tell you the situations to get there as well so two I'm going to give two examples the first one this is a very simple one let's say all the lotto validators got slashed um say they're transitioning all their clients and they did this whatever it's clearly possible on a subset it can be possible on the entire set and again we're only talking about one validator multiple validators can be affected if they had slashed on all of their

values at a starting point that's half an eve per validator I believe it's six to seven thousand validators uh so they're alone you're looking at three and a half thousand each so that is the initial slash penalty now you have the leak that comes out so while all these all these flash validators have to be exited uh they're forced out of the network it's one part of the penalties for slashing in that period of time you leak you don't gain any awards and you lose value hopefully you don't get a sink actually no you do not yeah you just lose value there is a second after a certain period of days passed there's a checkpoint where the networks will look and see how many other validators in the network

have been slashed because you alone were so much so large over one percent of the network that triggers a correlated slash and I believe that adds like an additional few percent of your total Capital as a cost yeah and again like we can at least double yeah we should have prepared for this but the the point of this is like the more validators that were slashed concurrently the the bigger the penalty is and the idea is that like okay if only a few validators were slashed in the last month like that was probably a couple of node operators that like messed up and like no big deal it runs

down yeah but if like 10 of the network was Slash like there's a very very good chance that was an unsuccessful attack and so we want to make sure that those people are severely punished and so I don't remember what the numbers are but like the scaling is like outrageous it's like if yeah if like five percent of the network right so so let's say frax doubles and they're one validate or they're one node that is running all this gets slashed that will destroy all of their yeah a large chunk all of these that is like it and I don't know this off the top of my head don't quote me on this but it's something like

five percent of the networking slashed at once will destroy all of the eth you can find the exact details on eth book eth2 book uh it was written by Bennett who was uh the podcast that came out this week beautiful I love Ben he puts out incredibly incredibly useful content uh really breaks this stuff down and gives you the exact formula to see how bad it is I'm not sure if it was five percent I think it was 33 or 30 if you it was at 33 and they get all slash then it's all the capital gets wiped out yeah I don't know exactly it's somewhere in that range though the point is is it's not linear right and so it's like it's not

it's like if one percent of the network like results in like you know a full eth being removed two percent does not result in two per two eth being removed it results in like six even removed and so um again we we need to do more research on things we talk about in detail but notably what will guarantee to wipe everything out is if Jeff has a full and get has a bug the networking group is currently sits at like 90 dominance within Lido it's at 87 dominance rocket pool it's 50 under 50 just about and currently dropping as we just started initiative to further drop it yeah and

so just uh um just to like flush out what you're talking about it's the uh for non-stakers here's a crash course it's like when you're staking you're running two pieces of software the consensus client and the execution client consent and the like very cool thing that ethereum in only ethereum has done has made a priority to say we need to have multiple options for these clients and the reason we do that is because if there's a bug in a client we want or a client is vulnerable to an attack we want there to be like a bunch of different options and we want different people to be running the different options we've really really screwed up is on the execution client which is like it's

exactly the same as um ethereum proof of work and is now just encapsulated in ethereum proof of stake but 85 of the network uses the one thing and the problem is if there's a bug in that one thing um let me put it this way everybody with a liquid staking token is screwed most stakers are screwed but the people running never mind are like yeah the only people with yep left their release some rockable node operators out there who survive a good shot yeah and uh PSA for rock and pull node operators I I am running Geth I need a change but um the reason I haven't done it yet is because my brain is very smooth and and I need

to be certain but like rocketpool has a service for us it's called the rescue node and like that will that's a resource for us to use to like continue a testing and continue our duties while our node is offline changing out of gas change out of gas rplclientiversity.com you can get yourself a PO app for changing yeah nice well yeah I'll do that and and it's even easier on the consensus side so if you're on a lighthouse or um prism get off all right cool well um great conversation about staking in man like of all the people on this planet like you know that like we could keep going on this for like days and days and days but um big believer in keeping it tight and so um with our last

uh like section here I would love to Pivot the conversation kind of away from um rocket pool and like pivoted like directly towards Jasper and so um one of the things that like I think is like so cool is that like you were as much of a zealot as I am and like you are a believer in the world computer and like you can't keep your mind away from it like even if you try and let yeah you're taking like a major step away like a major major step away and like that is like I am so excited and proud of you and like amazing man like you're going to medical school and so um one like I would just love to hear like like tell me like when did you know you want

to be a doctor like how how long has that been part of your journey and like what does that mean to you but to like how are you thinking about um like this is the Hotel California you never leave but like how are you thinking about like doing something so as intense and as time intensive as a medical school but still um keeping your like umbilical cord to the world computer so I've been in love with medicine for a majority of my life actually I come from a medical family I have relatives in the military asthmatics and they had a huge impact on me early on as role models for high school I actually attended a

vocational Academy that focused on health care so I had a huge amount of hands-on experience from a young age um and there's this feeling you get when you're doing something Hands-On in the moment with someone when you're being a physical caretaker that is just not replicable in any other media early on at my undergrad career at Princeton when I was studying philosophy I kind of wanted to study philosophy to figure out what the I wanted to do for the rest of my life I mean why else do you study philosophy and and Peter Singer is a famous utilitarian who got

corrupted in the view if you followed SBF and effective altruism but what Peter Singer presents is a is a fundamental question everyone should ask themselves in that is the ultimate good that you want to do a subjective one or a quantifiable one and to understand the problem he sort of gives this idea of you can save someone in the middle or in Africa by donating uh a mosquito net statistically if you donate mosquito Nets you will save someone I mean malaria is a horrible disease mosquito Nets save lives oh and you can like sort of map out the dollar value and so say it's a thousand dollars quote

unquote Save a Life uh and then there's this other situation where you are just walking along you see someone drowning and you're wearing a thousand dollar suit is there a difference between running into the water saving that person and spending a thousand dollars for a mosquito Nets in Africa for me personally there's a huge difference even though even if I can just like quantifyly say like hey I probably saved a life like and if I did like two million dollars in donation I can be like oh I definitely saved at least some number of wives but you're never getting that lived experience you're never getting that that connection you're never going to know that this person with the X Y and Z characteristics is now in a better State

because of X Y and Z that I was physically there for and so understanding that ultimately pushed me further and further into clinical practice and so even though I was writing all these like thought pieces I was still at the end of the day still being a meditation counselor uh peer mental health counselor in the background even when I was writing my crypto pieces for Rocket pool at the background I was studying in a post-bac program at a vaccine clinic and being a full-time caretaker to my sister actually so medicine has always been the the front of my physical activity and so while I can like idly dream about like hmm imagine if decentralized Finance was

based on X Y and Z private schools that doesn't require my physical presence and in a lot of ways I feel like I'm only giving my true output to the world in when I can be there physically so yeah that idea of this the embodiment of action of service brought me to Medicine well okay this is like gonna be two out there and um just like too kitschy sorry but do you see any intersection between crypto and Medicine yeah but it's going to depress you but uh I come from America and our Healthcare System is horrible part of the reason I want to go into is to try

to fix the disaster that we have and like ideally the so we run on an EMR uh electronic medical record system and is not centralized it is the worst form of decentralization privatized and corrupted and centralized by proxy uh yeah centralized by proxy so you have like three different EMR systems that don't communicate with each other and are horrible that fragment the system then you have a similar situation with insurance so I see where medical or blockchains can help in this uh standardization of data transfer and privacy protection at the same time uh like that's what we have

that's what national uh Healthcare systems are good for is a standardization of healthcare access in America we could in theory sort of maintain our privatization of healthcare if we adopted and and get some of the benefits by adopting this ZK system for healthcare information the problem of course is that there is such a wall of bureaucracy in the way and Healthcare is inherently resistant to change crypto and Healthcare sort of exist on opposite spectrums where in crypto you experiment first think later and Healthcare is Do no harm you're preserving the welfare of the individual

and you experiment if you can and like you want to push the boundaries of science but ultimately you're trying to save the individual you're you're not trying to be the hero um and so I sort of locked myself in this analogy here no no but well I mean I think um what you're saying is like obviously true right what the a place for crypto in healthcare is in the medical records and um in one of my other podcasts some one of my guests said something which I loved and like my game is always like what's the most reductive way you can describe uh ethereum yeah and what he said was like um well ethereum is just like really an API that like allows all these different like like games or

whatever that we're gonna build to like communicate with each other and I'm like man I love it I totally love it because like that really frames ethereum is something more than like Financial rails and um you know I do think that medical records like once you understand ZK as the technology to um enable it is like that that kind of solution you have a ZK Porter style roll up or an adamantium you have like three very verifiers it doesn't matter if the verifiers are centralized it's of one at one of n crossed assumption like that's totally fine if you like if the US government the CDC and the World Health Organization are the verifiers uh it's very unlikely for one of them to go

Rogue any even then they're still like be how cases of you should be able to be able to you should be able to still do your own fraud uh checking of those proofs if you're a sophisticated out there which uh is like a whole whole Pandora's Box conversation of like open source like a shield and it is like such a scam no one can audit this stuff yeah it's it's yeah yeah yeah so anyway again if I let this go we go for hours and hours so Jasper man it was it's just been such an honor and I really appreciate it so much so thank you for joining us on the Pod and before uh we send you off you want to um share where people can find you and uh anything you want to shout out yeah sure so you can find me on Twitter at Jasper underscore

eth yeah I spend most of my time however in the trading channel of the rocketball Discord where I am a community advocate and I serve on the incentive management committee so if you have D5 strategies that you want to seek rocketpool getting uh taking action with let me know that is my job in trying to connect rocketpool our eth to the greater D5 ecosystem and this has been a great podcast thank you for having me I've always respected your your opinions on the space and I think this reflects this conversation reflects the quality of the discussion you've put out on the space so thank you again man you're being too kind I you actually like are in the trenches and like working on civilization strategies and I'm like a

guy who like writes on Twitter for attention so I mean the people that write get the people involved any of the Educators yeah all right man Jasper it's been real thank you so much man I'll talk to you soon thank you